A book about people, risk and money – three of the most interesting aspects of human life

The basic need for insurance and pension arrangements stems from personal risk and uncertainty, and it is not a modern phenomenon. Even in ancient civilisations we can see the beginnings of such insurance, with the grant of pensions in ancient Greece and the formation of burial societies in ancient Greece and Rome. In the Middle Ages it was sometimes possible to secure one’s old age with a pension or even to purchase a room at a monastery with board and lodging provided. Marine insurance was invented, in order to help the expansion of trade, and this was followed by the beginnings of life insurance.

Inevitably this is partly a book about ‘firsts’. The beginnings of the insurance principle can be traced as far as 1780 B.C. The first known old age pensioner lived in 562 B.C and features in the Bible. The earliest insurance fraud of which we have details was attempted in 350 B.C., when the owner of a ship tried to sink it. The first known occupational pension on retirement due to old age was awarded by Henry III of England to one of his sergeants in 1269. The earliest insurance policy of which we are aware was issued in 1350, on a cargo of wheat shipped from Sicily to Tunis. Life insurance goes back at least as far as 1399, when a policy was issued covering someone on a voyage from Barcelona to Italy. Astonishingly, the first occupational pension fund was established as early as 1590. This was the Chatham Chest, which paid pensions to disabled seamen and was financed by members’ contributions which were deducted from their pay. There was great concern about the losses which people suffered in the Great Fire of London and in other fires in towns, and the first British fire insurance company was founded in 1680.

References to Scotland in this book include the grants of pensions to Edward de Baliol (1332) and Alan Durward (1254). Chapter 7 discusses the new but unproven hypothesis that Napier, the Scottish inventor of logarithms (1614), may have been inspired to do so by studying the properties of compound interest tables. Chapter 8 describes the grant of pensions by Edinburgh Burgh Council in the sixteenth and seventeenth centuries, and also the pensions payable by Leith Trinity House in 1747. Chapter 12 gives a long account of the pioneering pension fund for Scottish ministers’ widows (established 1743). Our story finishes around 1800, when the foundations were well in place for the pension funds and life insurance companies which emerged on such a scale in the following two hundred years.

Author: C.G. Lewin, an actuary who has spent most
of his working life as a pensions manager, lives in Peebleshire with his family.